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(Demonetisation) Finance Ministry Modifies Norms In Daily/Weekly Bank Notes Withdrawal Limits

Ministry of Finance, Department of Economic Affairs, Extraordinary Gazette Notification, Part II, Section 3, Sub-section (ii) initially notified on 8th November 2016 thereafter modified from time to time (see notes)

Whereas, the Central Board of Directors of the Reserve Bank of India (hereinafter referred to as the Board) has recommended that bank notes of denominations of the existing series of the value of five hundred rupees and one thousand rupees (hereinafter referred to as specified bank notes) shall be ceased to be legal tender;

 And whereas, it has been found that fake currency notes of the specified bank notes have been largely in circulation and it has been found to be difficult to easily identify genuine bank notes from the fake ones and that the use of fake currency notes is causing adverse effect to the economy of the country;

 And whereas, it has been found that high denomination bank notes are used for storage of unaccounted wealth as has been evident from the large cash recoveries made by law enforcement agencies;

 And whereas, it has also been found that fake currency is being used for financing subversive activities such as drug trafficking and terrorism, causing damage to the economy and security of the country and the Central Government after due consideration has decided to implement the recommendations of the Board;

 Now, therefore, in exercise of the powers conferred by sub-section (2) of section 26 of the Reserve Bank of India Act, 1934 (2 of 1934) (hereinafter referred to as the said Act), the Central Government hereby declares that the specified bank notes shall cease to be legal tender with effect from the 9th November, 2016 to the extent specified below, namely:—

1. (1) Every banking company, Co-operative Banks (only Urban Co-operative Banks and State Co-operative Banks), corresponding new bank, subsidiary bank, regional rural bank and the State Bank of India as defined under the Banking Regulation Act, 1949 (10 of 1949) (hereinafter referred to as ‘banking company’ or ‘bank’) and every Government Treasury shall complete and forward a return showing the details of specified bank notes held by it at the close of business as on the 8th November, 2016, not later than 13:00 hours on the 10th November, 2016 to the designated Regional Office of the Reserve Bank of India (hereinafter referred to as the Reserve Bank) in the format specified by it.

 (2) Immediately after forwarding the return referred to in sub-paragraph (1), the specified bank notes shall be remitted to the linked or nearest currency chest, or the branch or office of the Reserve Bank, for credit to their accounts.

2. The specified bank notes held by a person other than a banking company referred to in sub-paragraph (1) of paragraph 1 or Government Treasury may be exchanged at any Issue Office of the Reserve Bank or any branch of bank referred to in sub-paragraph (1) of paragraph 1 for a period up to and including the 30th December, 2016, subject to the following conditions, namely:—
(i) the specified bank notes of aggregate value of Rs.2,000/- or below may be exchanged for any denomination of bank notes having legal tender character, with a requisition slip in the format specified by the Reserve Bank and proof of identity; [omitted with effect from 25th November, 2016 (midnight of 24th November, 2016)]
(ii) [omitted];
(iii) there shall not be any limit on the quantity or value of the specified bank notes to be credited to the account maintained with the bank by a person, where the specified bank notes are tendered; however, where compliance with extant Know Your Customer (KYC) norms is not complete in an account, the maximum value of specified bank notes as may be deposited shall be Rs. 50,000/-;
(iv) the equivalent value of specified bank notes tendered may be credited to an account maintained by the tenderer at any bank in accordance with standard banking procedure and on production of valid proof of Identity;
(v) the equivalent value of specified bank notes tendered may be credited to a third party account, provided specific authorisation therefor accorded by the third party is presented to the bank, following standard banking procedure and on production of valid proof of identity of the person actually tendering;
(vi) cash withdrawal from a bank account over the counter shall be such as may be specified by the Reserve Bank of India from time to time:
Provided that cash withdrawal from a current account shall be such as may be specified by the Reserve Bank of India from time to time:
Provided further that the withdrawal limit provided for current accounts shall also be applicable to the traders registered with the Agricultural Produce Market Committee (APMC) markets and mandis. [substituted - refer note #8]
(vii) there shall be no restriction on the use of any non-cash method of operating the account of a person including cheques, demand drafts, credit or debit cards, mobile wallets and electronic fund transfer mechanisms or the like;
(viii) cash withdrawal from an ATM shall be such as may be specified by the Reserve Bank of India from time to time; [substituted - refer note #8]
(ix) any person who is unable to exchange or deposit the specified bank notes in their bank accounts on or before the 30th December, 2016, shall be given an opportunity to do so at specified offices of the Reserve Bank or such other facility until a later date as may be specified by it.
(x) the limits for cash withdrawal by farmers from their loan and other accounts shall be such, as may be specified by the Reserve Bank of India;
(xi) for wedding expenses a maximum of Rs. 2,50,000/- may be withdrawn in cash from the bank accounts, subject to such conditions as may be specified by the Reserve Bank of India.

3. (1) Every banking company and every Government Treasury referred to in sub-paragraph (1) of paragraph 1 shall be closed for the transaction of all business on 9th November, 2016, except the preparation for implementing this scheme and remittance of the specified bank notes to nearby currency chests or the branches or offices of the Reserve Bank and receipt of bank notes having legal tender character.
(2) All ATMs, Cash Deposit Machines, Cash Recyclers and any other machine used for receipt and payment of cash shall be shut on 9th and 10th November, 2016.
(3) Every bank referred to in sub-paragraph (1) of paragraph 1 shall recall the specified bank notes from ATMs and replace them with bank notes having legal tender character prior to reactivation of the machines on 11th November, 2016.
(4) The sponsor banks of White Label ATMs shall be responsible to recall the specified bank notes from the White Label ATMs and replacing the same with bank notes having legal tender character prior to reactivation of the machines on 11th November, 2016.
(5) All banks referred to in sub-paragraph (1) of paragraph 1, ATMs and White Label ATMs shall dispense bank notes as may be specified by the Reserve Bank of India from time to time. [modified - refer note #8]
(6) The banking company referred to in sub-paragraph (1) of paragraph 1 and Government Treasuries shall resume their normal transactions from 10th November, 2016.

4. Every banking company referred to sub-paragraph (1) of paragraph 1, shall at the close of business of each day starting from 10th November, 2016, submit to the Reserve Bank, a statement showing the details of specified bank notes exchanged by it in such format as may be specified by the Reserve Bank.


Notes (Gazette Notifications):

#1 - 1) Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3407(E) dated the 8th November, 2016 - link

#2 - Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3418(E) dated the 9th November, 2016 - link

#3 - Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3446(E) dated the 13th November, 2016 - link

#4 - Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3449(E) dated the 14th November, 2016 - link

#5 - Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3479(E) dated the 17th November, 2016 - link

#6 - Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3488(E) dated the 18th November, 2016 - link

#7 - Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3543(E) dated the 24th November, 2016 - link

#8 - Notification of the Government of India, in the Ministry of Finance, Department of Economic Affairs number S.O. 3599(E) dated the 30th November, 2016 - link
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